ESG ETFs launched this year probably won’t move the needle enough, warns CEO

The CEO of Van Eck Associates says a growing supply of environmental, social and governance-related exchange-traded funds will not be enough to meaningfully mitigate broader issues such as climate change.

“ESG is good as a coherent investment approach on a fund-by-fund basis to make a difference and that is a good sign, but to put that in perspective, it is not going to change the end result where we need to be. should,” Jan van Eck told CNBC’s “ETF Edge” this week.

A record number of ETF launches this year have been ESG funds, with several top issuers launching theme-based versions of their most popular funds:

When it comes to significant change, however, “where the real lift is going to come is from breakthrough technologies” such as drought-resistant farming, Van Eck said in a Monday interview.

“It’s really technology companies and technology investments, whether privately or with public companies, that’s really going to bend the curve here.”

That’s why the CEO says that MOTE has a “developing flavor” compared to its non-ESG counterpart, with Alphabet, Microsoft, Service Now, Applied Materials and Salesforce.com making up the ETF’s top holdings.

CFRA senior director of ETFs and mutual fund research Todd Rosenbluth said in the same interview, although the market may seem to have a surplus of ESG offerings, investor interest should increase.

“There is more supply than demand right now, but the future looks great, we think, for ESG-related products,” he said. “We think we’re going to see more of these products.”

Rosenbluth said the ESG version of Invesco’s QQQ Trust (QQQ) could launch by the end of the year.

But investors already have many options in all corners of the ESG space, he said — clean energy funds such as the iShares Global Clean Energy ETF (ICLN), issue-based funds such as the Simplify Health Care ETF (PINK), which Susan Yes. Komen donates at least $100,000 per year in net profit to the breast cancer organization, and focuses on corporate governance such as Engine No. 1’s Transform 500 ETF (VOTE).

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